Can you buy a house with no money up front?

JQ.

tbs624 wrote: »

Paying out the disbursements on behalf of a client with a lack of income and/or savings is in effect offering a loan which is unsecured -add the fact that the sale & purchase may not reach a conclusion and the fact that the "higher fees" may of course not get recovered ( or recoverable only at silly ££ per week via a court judgement) and it's likely to be a risk too far.

???? an unsecured loan ????

What rubbish. It's just another cost of running a business and it's all about cashflow. Do solicitors ask for cheques off their clients when their rent is due or they need to pay their business rates?

I totally understand why they do it. But by charging disbursements in arrears the client is no less liable for them. I just can't believe in these days of "no costs upfront" that someone hasn't offered such a service.

If such a service doesn't exist then perhaps the OP could buy a newbuild where the developer covers all legal costs meaning they could move from their rundown house into a brand new one.

tbs624

JQ. wrote: »

???? an unsecured loan ????

What rubbish.

Thanks for sharing your opinion. Did your ? key get stuck?

JQ. wrote: »

It's just another cost of running a business and it's all about cashflow. Do solicitors ask for cheques off their clients when their rent is due or they need to pay their business rates?

I totally understand why they do it. But by charging disbursements in arrears the client is no less liable for them. I just can't believe in these days of "no costs upfront" that someone hasn't offered such a service.

Never mind all the question marks - of course it would be , as I said, in effect an unsecured loan if clients did not pay in advance for their disbs.

Your comment about gathering in payment for work done, so that rent and rates can be paid, is not relevant to the shortcomings in your suggestion that clients with illiquid (and diminishing) assets should be able run up a bill for disbs.

You fail to allow for the fact that the purchase and sale may fall apart before exchange. Client still has no readies available.

There are strict rules governing the way solicitors deal with their accounts - disbs are an expense incurred wholly on behalf of a client and it is right that they are paid upfront.

No-one has said that the client would be any less liable if the disbs were billed after the sol had completed the job - the issue would be that the client in these dire financial circumstances may need to be pursued for repayment for the disbs, (plus of course the fees for the work done on abortive sale/purchase) if all goes belly up.

The point is that its no good saying "I'll charge a higher fee if you want your disbs on account, as that will cover my risk" - the fact is that the sol may not see the higher fee ( or get the disbs recovered) at the end of it all. Yes, they can obtain a CCJ ( further time & effort) and get to slap a charge against the clients property and then sit and wait and wait.......

JQ.

So you're saying it's a legal requirement that disbursements are paid in advance? Could you provide a link? As I said earlier I don't charge disbursements in advance and my firms solicitors don't.

I'm not saying all firms need to do this but I'm surprised someone hasn't tried it as a marketing tool. No different to all the other marketing tools in the property industry :
Part-ex (developers)
All fees paid (developers)
Fixed fees (solicitors)
Fixed Fees (Estate Agents)
Pay in advance for a discount (Estate Agents)
No fee mortgages
Stamp duty paid

All the risks and potential costs associated with such schemes are factored into the total cost, nothing is free in this world.

And I don't see why you think the OP is in such "dire financial circumstances" - the only issue is that she is asset rich and cash poor. I personally think she can buy a new house without any cash. If such disbursement schemes don't exist (I suggested it to see if anyone knew of any) then she can buy newbuild.

OP puts house on market with EA
Agrees sale of house at £x
Buys newbuild house off developer for £x less 10%, or whatever suitable amount, where developer agrees to cover all legal expenses
Estate Agent fees, solicitors fees for sale and stamp duty are paid out of sale proceeds on completion.

tbs624

JQ. wrote: »

So you're saying it's a legal requirement that disbursements are paid in advance?

No, that is not what I said.

JQ. wrote: »

And I don't see why you think the OP is in such "dire financial circumstances" - the only issue is that she is asset rich and cash poor.

She says has a property in need of more than 20ks worth of work and says she can't always afford to put food on the table. Most people would think that dire ( although it was more of a general description of the circumstances of any potential buyer/seller who didn't have available funds for even the basic costs associated with house purchase/sale)

JQ. wrote: »

I personally think she can buy a new house without any cash. If such disbursement schemes don't exist (I suggested it to see if anyone knew of any) then she can buy newbuild.

OP puts house on market with EA
Agrees sale of house at £x
Buys newbuild house off developer for £x less 10%, or whatever suitable amount, where developer agrees to cover all legal expenses
Estate Agent fees, solicitors fees for sale and stamp duty are paid out of sale proceeds on completion.

...and how would the OP fund the costs incurred if sale/purchase collapsed?

kingstreet

FWIW the firm I use for my personal business and recommend to clients, routinely don't ask for payment for disbursements upfront.

MoominMama

Wow, lots of replies, thanks. I'm very confused now though lol, I don't understand any of this but all I know is I wouldn't sleep at night with deferred fees knowing the sale could fall through and I'd have to pay them still.
I should have said 'mortgage protection plan' rather than life insurance, sorry, when my husband died it paid off the mortgage but didn't give me do much as a penny in my bank.

merlin68

Op are you claiming everything your entitled to? Widowed parents allowance and child tax credit and child benefit. also council tax benefit.

JQ.

MoominMama wrote: »

Wow, lots of replies, thanks. I'm very confused now though lol, I don't understand any of this but all I know is I wouldn't sleep at night with deferred fees knowing the sale could fall through and I'd have to pay them still.
I should have said 'mortgage protection plan' rather than life insurance, sorry, when my husband died it paid off the mortgage but didn't give me do much as a penny in my bank.

There really are some doom and gloom merchants on here who only ever look for the worst possible outcome and revel in peoples misery. All fees are payable in arrears on a house sale / purchase, it's how it all works and has done for years

I really do think it would be possible to sell without cash upfront:

EA's fees will only be payable upon completion of the sale.
Solicitors fees will be payable upon completion and it does appear some solicitors will accept disbursements upon completion
Stamp duty will be payable upon completion

Sales do fall through and it would be the sale of your own home that may fall through that would complicate things if you bought newbuild, as you would be responsible for your solicitors fees. However, sales generally fall through after survey or upon mortgage application by your buyer, at which point you would not have incurred any solicitors costs anyway. In which case you just start re-marketing the property and start the process again. So there's a very slim chance you'd be responsible for any costs.

Perhaps King Street could give a % indication of how often sales fall through after the survey is complete and the mortgage is approved and it's moving to exchange where a chain is not involved, I'd imagine it's quite low.

I would suggest your first port of call would be to go and see some newbuild properties and speak directly to the developers and explain the situation, you may find that if you agree to purchase said properties at asking price or with little negotiation they may be willing to indemnify all your costs associated with the sale and purchase so long as you market your house at an attractive price that means it will sell quickly (potentially to another developer or builder, if it really does need that much work).

Ideally you'll need to look at houses say 10 to 20% less than the value of your current house.

The issues arising will be that you'll likely pay over Market Value for the new house and to ensure the sale of your old house happens quickly and without falling through you'll need to market it for less than it's Market Value. I'd also make sure the purchaser of your house is not in a chain, which will further minimise the likelyhood of the sale falling through. However, if it gets you out of your current situation and into a house with no ongoing maintenance issues then it might not be such a bad thing.

Another thought - why not sell your house at auction, all fees are payable out of the proceeds. However, if it fails to sell then you'd be responsible for them. It might be worth speaking to some auction houses about selling the property with no fees guaranteed unless it sells. They might charge you higher fees and would probably require that you place a very realistic reserve on the property to ensure it does sell. You'll then have 28 days to go out and buy a new house with the proceeds. Again to ensure that your purchase 100% does proceed in the 28 days then you'd probably need to buy newbuild. Although, I've no doubt that if you approached a developer with 100% cash and said you wanted to buy one of their properties within 28 days you'd be able to negotiate a very good deal.

I really do think you can sell the house and buy a new one without any cash. There is a very very slim chance that something may go wrong and you'll be responsible for a small amount of fees (£200/£300). And in reality, even if that did occur, I've no doubt if you explained the situation to the solicitor they'd defer the fees until the sale did finally occur. There's no point chasing you for money if you don't have any.

I hope you get yourself sorted, good luck.

tbs624

JQ. wrote: »

T
I would suggest your first port of call would be to go and see some newbuild properties and speak directly to the developers and explain the situation, you may find that if you agree to purchase said properties at asking price or with little negotiation they may be willing to indemnify all your costs associated with the sale and purchase so long as you market your house at an attractive price that means it will sell quickly (potentially to another developer or builder, if it really does need that much work).

Ideally you'll need to look at houses say 10 to 20% less than the value of your current house.

No doubt there may be a developer, with an eye on a hefty profit x2 , who may even consider also taking the OPs property in p/ex. However, as you say:

JQ. wrote: »

. The issues arising will be that you'll likely pay over Market Value for the new house .

my bolding

This is an issue which may deter people in the OP's position, when looking at new developments - they are indeed likely to end up paying *well* over market price for the new property, as well as selling their own at a substantial knock down too. For someone on their own with a young family and a limited income that may not be the best route.

Clearly though, that is a decision that the OP would have to make after balancing up all her options

OP - you didn't respond to the question about what work is not covered by the 20K grant to which you referred, for your current property?

Its obviously a very small part of your current needs but you mention having no carpets. Have you considered signing up to Freecycle?

MoominMama

Just an update.

I did it. I sold my house and bought another one without having a single penny upfront. My estate agents and the solicitor have all been wonderful, they have been on the ball, understanding, helpful and patient. My solicitor is happy to take payment when we complete so my buyers send him their money, he takes out his fee, he gives the EA their fee, gives the person I'm buying their money and I get what's left over.
I've exchanged and the completion day is the end of Oct.

The only thing I did have to have money for was the survey. Technically I could have just risked it and not had it done, but seeing as the house I'm buying is Victorian and I'm in no position to be able to do any kind of DIY or house repairs I wanted peace of mind that the house was in a good state. My mother loaned me the money and I will pay her back when I complete.

It's all been very smooth sailing, the only hitch was my vendor being quite difficult about agreeing to exchange and completion dates but the more serious side of things has gone without any problems.

My EA fee was only 0.75% too so that was good!